Splitting savings and investments

Which savings count as matrimonial assets?

In general, savings and investments accumulated during your marriage are considered matrimonial assets – meaning they go into the “pot” to be divided between you, regardless of whose name they’re in.

This includes:

• Current account balances
• Savings accounts
• Cash ISAs and Stocks and Shares ISAs
• Premium Bonds
• Individual shares and share portfolios
• Investment funds and unit trusts
• Bonds and gilts
• Investment properties
• Cryptocurrency holdings

Simply having an account in your sole name doesn’t exclude it from the matrimonial assets. What matters is when the savings were accumulated and whether they came from joint efforts during the marriage.

Pre-marital savings

Savings you had before getting married may be treated differently. These are “non-matrimonial assets” and you may be able to argue they should remain yours.

However, if you’ve mixed pre-marital savings with money earned during the marriage, or used them for joint purposes (like a house deposit), tracing what’s yours becomes difficult. The longer the marriage, the less likely pre-marital savings will be kept separate.

Full financial disclosure

During divorce, both of you must provide full and honest disclosure of all your finances. This is typically done through Form E, which requires you to list:

• All bank and building society accounts
• ISAs and other savings products
• Share holdings and investments
• Premium Bonds
• Any other financial assets

Hiding assets is taken extremely seriously by courts. If discovered, it can result in the settlement being reopened, costs orders against you, and damage to your credibility.

How savings are divided

There’s no automatic 50/50 split. Courts aim for a fair division based on your circumstances, considering factors like:

• Each person’s financial needs
• The standard of living during the marriage
• Ages and health of both parties
• Contributions to the marriage (including non-financial)
• Earning capacity going forward
• Needs of any children

In practice, straightforward savings accounts are often the easiest assets to divide – they can simply be split by agreement, with one party transferring an agreed sum to the other.

Dealing with different types of savings

Cash savings accounts

Standard savings accounts are the simplest to divide. You can transfer money directly to your ex-partner’s account. However, check for:

• Notice periods: Some accounts require advance notice for withdrawals
• Early access penalties: Fixed-rate bonds may charge penalties for early withdrawal
• Lost interest: Breaking a fixed-term product early may forfeit interest

ISAs (Individual Savings Accounts)

ISAs present a particular challenge because:

• They can only be held in one person’s name
• You cannot transfer money directly from your ISA to someone else’s ISA
• Withdrawing money means losing the tax-free wrapper

If you need to give your ex-partner money from your ISA, you’ll have to withdraw it as cash. This means the ISA benefits are lost for that money. Consider whether it makes more sense to offset ISA holdings against other assets rather than cashing them in.

Lifetime ISAs have an additional complication – there’s a 25% government penalty for withdrawing money before age 60 (unless buying your first home).

Junior ISAs are in your child’s name and belong to them. However, if one parent has moved money into a child’s account to try to exclude it from the settlement, courts may view this suspiciously.

Shares and share portfolios

If you own shares, you have several options:

Transfer shares to your ex-partner: You can transfer shares directly using a stock transfer form (J30 form). This avoids selling costs but requires your ex-partner to accept shares rather than cash.

Sell shares and split proceeds: Selling converts the investment to cash, which is easier to divide. However, you may face dealing charges, and selling when the market is low locks in losses.

Offset against other assets: You keep the shares and your ex-partner receives a greater share of other assets (like the house or pension) of equivalent value.

Consider timing carefully – share values fluctuate, so the value on Form E may differ from the value when you actually divide them.

Investment properties

Investment properties (buy-to-let, holiday homes) need to be valued as part of your disclosure. Options include:

• Selling and splitting the net proceeds
• One party buying out the other
• Continuing joint ownership (unusual, as it keeps you financially tied)
• Offsetting against other assets

Remember to account for any mortgage on the property, potential capital gains tax on sale, and the income the property generates.

Tax considerations

Capital Gains Tax (CGT)

When you transfer assets between spouses, Capital Gains Tax can be an issue. However, there’s an important exemption:

Transfers in the tax year of separation are CGT-free. This means if you separate on 15 June, you have until 5 April the following year to transfer assets between you without triggering CGT.

After that period, transfers are treated as disposals at market value and may attract CGT (though various exemptions may apply).

This exemption doesn’t apply to:

• Your main residence (which is already exempt from CGT)
• Stocks and Shares ISAs (which are already tax-free)

Income tax

Some investments (like insurance bonds) may trigger income tax on gains rather than CGT. Different rules apply, and the spousal exemption for CGT may not apply. Professional advice is particularly important here.

Practical steps

1. List everything: Make a comprehensive list of all savings and investments held by either of you

2. Gather statements: Collect recent statements for all accounts – you’ll need these for Form E

3. Note the values: Record values at separation date and current values

4. Consider timing: Think about fixed-term products, notice periods, and market conditions

5. Factor in costs: Account for early withdrawal penalties, selling costs, and tax

6. Negotiate fairly: Consider the full picture – savings are just one part of the overall settlement

When you can’t agree

If you can’t agree how to divide savings and investments:

• Mediation can help you find common ground with a neutral facilitator
• Solicitor negotiation involves lawyers negotiating on your behalf
• Court is the last resort – a judge will decide based on the Section 25 factors

Most couples reach agreement without court involvement. The flexibility of negotiation often produces better outcomes than having a judge decide.